Senate rejects oil incentives repeal

Senate Democrats on Tuesday lost in their bid to have major oil companies pay billions of dollars more per year in taxes but are vowing to keep the issue alive in high-stakes budget talks with Republicans.

By a 52-48 vote, Republicans and oil-state Democrats sank a bill repealing $21 billion in tax incentives over 10 years for the five biggest private integrated oil companies.

“I am confident that before we finish our budget negotiations here and in anticipation of raising the debt ceiling that that would be part of it,” Senate Majority Leader Harry Reid told reporters before the vote Tuesday.

“Certainly our proposal for deficit reduction will include the elimination of these subsidies,” Chuck Schumer of New York, the Senate’s No. 3 Democrat, told reporters Tuesday. “I believe that all of us in the leadership — and I think pretty broad consensus in our caucus — [believe] that this is a place to start,” he added.

Republicans have said that any tax increase is off the table in budget and debt ceiling talks between congressional leaders and Vice President Joe Biden.

“That's not the kind of thing we're going to be dealing with here in connection with the serious talks that are going on with the vice president’s group,” Senate GOP leader Mitch McConnell told CNN on Sunday. “We are not going to raise taxes in connection with this problem.”

Amid public angst over high prices at the pump, Democrats acknowledge the idea would do nothing to lower gas prices. “We know it’s not going to have an effect on gas prices,” Reid said. Democrats are promising to bring up a clean energy and conservation bill this summer to address gas prices via reducing oil dependence.

Democrats said the bill on the floor Tuesday was needed to reduce unnecessary spending and help lower the debt, pointing to about $36 billion in profits over three months recently reported by Big Oil. "The administration believes that, at a time when it is working with the Congress on proposals to reduce federal deficits, the nation cannot afford to maintain these wasteful subsidies," according to a statement of administration policy.

Tuesday’s outcome was never in doubt. Democratic leaders knew the measure would fail to get the necessary 60 votes to advance, but it gave them a chance to give talking points to some of their vulnerable colleagues this election cycle.

”Where do we start with the goodies that are in the tax code? Might we not start with the most profitable companies in the history of the planet?” said Sen. Claire McCaskill (D-Mo.) — one of the leaders on the bill facing a tough Republican challenge.

Critics charge it wouldn’t make much of any dent in the annual deficit, unfairly singles out a handful of companies and would harm jobs.

“This is not an energy strategy; this is a public relations strategy; this is ‘how do I get elected’ strategy,” Sen. John Cornyn (R-Texas) said.